This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

Land Transfer Tax comes at price

Sun., Sept. 6, 2015

Re: Land-transfer tax keeps city from return to cash crises, Aug. 28

Land-transfer tax keeps city from return to cash crises, Aug. 28

In response to this column by Royson James, it is critical to highlight that the City’s projected $65 million year-end budget surplus as a result of Municipal Land Transfer Tax (MLTT) revenue has come with a price.

Between 2008 and 2013, the MLTT suppressed home sales in Toronto to the tune of 38,000 transactions, leading to a loss of $2.3 billion in economic activity and 15,000 full-time jobs (Altus Group, 2014).

The province also pays a price as a result of the Toronto MLTT. Thanks to the fewer home sales in Toronto, Ontario has missed out on $180 million in provincial land-transfer tax revenue.

Article Continued Below

Some 70 per cent of Torontonians want the MLTT repealed (Ipsos Reid, 2013). It’s an unsustainable tax and it’s unfair that the City is filling its rainy day coffers squarely on the backs of already stretched homebuyers.

Meanwhile, the provincial government is reviewing the Municipal Act with a focus on new revenue tools for municipalities, and several mayors are vying to replicate the “Toronto model” throughout the rest of the province.

The Toronto MLTT has hurt housing affordability, distorted the market and put a big tax burden on a select few. It’s a harmful way to raise revenue, fundamentally unfair and makes it more difficult for Torontonians to achieve the dream of home ownership.

Patricia Verge, president, Ontario Real Estate Association

By focusing on whether the City needs the MLTT revenue, Royson James missed the more relevant question: is this tax the right tool? Many strongly believe that it is not.

The MLTT has generated surpluses on the backs of first-time home buyers and people purchasing below-average priced homes. This is because city hall has allowed built-in relief for these Torontonians to evaporate.

When this tax was first implemented, city council decided to exempt first-time home buyers who purchased a home priced up to $400,000. They also levied a lower tax rate on anyone purchasing a below-average-priced home (under $400,000 at that time). Neither of these thresholds has been adjusted since then, even though average prices have risen considerably (currently at $665,000).

As a result, 61 per cent of first-time buyers, according to Ipsos Reid, have had to pay LTT, and people purchasing below-average priced homes are paying the highest MLTT rate. Between 2008 and 2014, the average MLTT paid increased by a whopping 102 per cent, because more and more of the value of an average-priced home is being charged the highest MLTT rate.

Short of eliminating this tax altogether, the right thing to do is to adjust the MLTT’s relief for first-time and average home buyers to reflect today’s reality.

Von Palmer, chief privacy officer, Toronto Real Estate Board

Delivered dailyThe Morning Headlines Newsletter

The Toronto Star and thestar.com, each property of Toronto Star Newspapers Limited, One Yonge Street, 4th Floor, Toronto, ON, M5E 1E6. You can unsubscribe at any time. Please contact us or see our privacy policy for more information.

More from the Toronto Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com